Results for "Tax Planning"

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Taxes on dividends may nearly triple

May 2, 2010

Under current law, the Medicare payroll tax applies only to wages. Beginning in 2013, however, a new 3.8% Medi-care tax will be imposed on high-income earners and will be applied to investment income. The current 35% tax on investment income,...

Look out for hidden swap taxes

April 4, 2010

Buried in the jobs creation law signed by President Barack Obama last month were a number of tax and reporting provisions that have nothing to do with employment opportunities. One such provision (the new Subsection K of Internal Revenue Code...

Estate Tax Void has Unintended Consequences

February 7, 2010

There is good news and bad news having no estate tax this year. The good news is obvious: no estate tax. But the bad news is that there is no longer a step-up in basis for property with unrealized capital gains. This means that some heirs could...

Proposal to tax transactions is misguided

January 10, 2010

By seeking to tax stock transactions, legislation introduced recently by Rep. Peter DeFazio, D-Ore., would penalize the innocent at an exorbitant rate. The congressman's website offers an explanation for the Let Wall Street Pay for the Restoration...

Two items to add to Jan. 4 to-do list

November 29, 2009

There are few places in the tax law where one can “undo” an earlier taxable act. Exercising incentive stock options and converting a conventional individual retirement account to a Roth IRA are two of these. Since it's possible to optimize...

Harvest losses without hurting alpha

November 1, 2009

Most money managers who strive to be tax-efficient harvest losses year-round. A 2001 study by First Quadrant LP, a global institutional money manager, found that continual loss harvesting can add 80 basis points annually to an indexed investor's...

GRATs: Make hay while the sun shines

October 4, 2009

In his book “Integrated Wealth Management: The New Direction for Portfolio Manager” (Euromoney Institutional Investor, 2006), Jean Brunel educates us as to the benefits of asset “location” — not to be confused with asset allocation....

Pity the poor folks making $1M plus

September 6, 2009

High-income earners are in the government's cross hairs — at both the federal and state levels — and there is little sympathy for those so targeted. In high-tax states like New York, the situation is particularly bad, especially for those...

New option for employee options

August 9, 2009

The recent SEC rule change allowing unexercised employee options to act as collateral for listed publicly traded options is good news for holders of employee options. Until now, if the holder of em-ployee options sold exchange traded calls on...

Two new munis and a swaps recap

June 28, 2009

Through the passage of the American Recovery and Reinvestment Act, the government has created Build America Bonds. These are vehicles through which the federal government subsidizes municipal issues so that issuers can offer investors higher...

Investors and Obama's tax plan

May 31, 2009

The Department of the Treasury's recently re-leased “Green Book” describes in detail the revenue proposals contained in the president's budget for fiscal-year 2010. Some proposals are simply the scheduled sunset of the Bush tax cuts. For example,...

When is a dividend not a dividend?

May 3, 2009

Some dividends aren't dividends at all. Sometimes they are a distribution known as a return of capital, which are actually returns of an investment instead of returns on an investment. There is much confusion about these payments because many...

Some good news for Madoff victims

April 5, 2009

The release of Internal Revenue Service Ruling 2009-9 and Revenue Procedure 2009-20 be-fore the April 15 filing deadline has granted timely guidance to victims of Bernard Madoff. For those accepting the government's safe-harbor offer, there...

Making most of excess capital losses

March 8, 2009

Since the market has devastated portfolios, many investors find themselves with substantial capital losses. Some losses are still unrealized, and others have been realized and can be used to offset capital gains. Unfortunately, capital losses...

Wash sales and index investing

January 11, 2009

Wash sale rules prohibit an investor from recognizing a loss for tax purposes if securities are sold and "substantially identical" securities are purchased within 31 days. We were recently reminded that these rules apply only to securities,...

Kudos to the tax writers

October 26, 2008

The government rescue plan inevitably will produce many villains. But one group that has performed like heroes in this turmoil is the Washington tax writers, who acted quickly to remove possible tax roadblocks to free up seized credit markets....

The tax impact of selling calls

September 1, 2008

Selling covered calls is a common strategy employed by many investors to en-hance the return of their equity position. In today's high-volatility, directionless market, this strategy has become quite attractive. Yet many investors with low-basis...

New IRS rulings affect investors

August 4, 2008

Three new revenue rulings released by the Internal Revenue Service over the past few weeks are likely to have substantial effects on investors. The first is Revenue Ruling 2008-31, which concerns foreign investors in U.S. real estate. Until...

Are deferrals worth it?

June 30, 2008

Last time, I discussed the rationale behind accelerating the payment of taxes rather than deferring taxes for as long as possible. In some cases, early payment makes sense. However, paying a tax early entails voluntarily depleting the money...

Harvest your capital gains?

June 2, 2008

A mantra of tax-efficient investing is to harvest capital losses and defer all gains. Does it ever make sense to take capital gains voluntarily? As a rule of thumb, no, but there are exceptions. Both Howard Marmorstein, associate professor of...

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